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San Francisco Market Report

Britain’s June vote to exit the EU has already had an impact on the market in the US, including here in San Francisco. Mortgage rates have dropped almost a quarter of a percent, making the monthly payments on our pricey housing slightly more affordable. The result is that it will support continuing increases in sales prices, as decreases in interest rates always do. For example, a $1,000,000 loan at 3.75% costs $4,631/month, but at 3.5% you can borrow $1,032,000 for the same monthly payment. And monthly payments are what buyers focus on.

The Federal Reserve Bank of San Francisco published its upbeat Economic Forecast in June which indicated continued strong job and economic growth, continued low business and mortgage interest rates (this was published prior to the vote in Britain), coupled with historically low unemployment and inflation below the Fed’s target of 2%. The conclusion is that they see Gross Domestic Product growth around 2% for the year, at a “pace consistent with moderate ongoing expansion, which we expect to continue over the next few years.”

Of interest was their findings about the cause of the lower labor force participation rates that have been occurring since 2001 that have been noted by many previous reports. It turns out that because of the considerable shift in the wage gains during this time period to the higher income households, that these households have fewer multiple earners. On the opposite end of the spectrum, lower wage earners continue to need multiple earners to make ends meet.

The Fed report hypothesizes that this is a shift that the upper-income households have made in the work-life balance and that the workforce participation in this group may remain low. It is also mimicked by the young workers in upper-income households, where labor force participation is also significantly lower than in the general population.

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San Francisco Single Family Home median prices have been hovering between $1,352,000 and $1,380,000 for the past four months since peaking at $1,400,000 in February 2016. That was the second time median prices had hit that number, first back in May of 2015. With the drop in interest rates, we could break through that median price soon because that drop from 3.75% to 3.5% finances another $45,000 in the loan amount for the same monthly payment.

The Condo/Loft Median Sales Price hit an all time high of $1,180,000 in June 2016, up 4.9% from June 2015.

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Resale Condos-Lofts jumped 59% in both Days on Market and Months Supply of Inventory compared to June 2015, but both are still in strong sellers market territory.

Single Family Homes are up slightly in Days on Market from 16 to 20 both for May to June, 2016 and from June 2015 to June 2016. Months Supply of Inventory dropped from 2.3 in May to 1.9 in June 2016 and was also down from June 2015’s 2 months. Both market indicators continue to show a strong sellers market.

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Single Family Homes New Listings dropped by 55 from May to June 2016. It was also off 61 compared to June 2015. Of additional continuing importance is that the year-to-date number of new listings is down 60 from year-to-date 2015, a 4.1% decline. This helps explain why Months Supply of Inventory is lower than last year.

Resale Condos/Lofts had the reverse trend, with 1 more new listing on the market in June than May, 2016, and 27 more new listings in June 2016 than June 2015. And, significantly, year-to-date new listings are up 167 over year-to-date 2015, which represents a 10.3% increase in inventory. This helps explain why Months Supply of Inventory and Days on Market has risen sharply for Resale Condo/Lofts.

No Mass Exit from San Francisco on the Horizon

At last month’s SFARMLS Building Boom forum, the Bay Area Council presented its latest poll of Bay Area residents, and said that the results show that a third of Bay Area residents “are likely to bolt the region in the next few years”. In truth, that is a big overstatement of the poll results.

What the poll actually asked for was a response to: “I am likely to move out of the Bay Area in the next few years.” What people answered was: 13% said they strongly agree with that statement and 21% said they somewhat agree.

That is certainly not a third of the residents saying they are likely to “bolt” in the next few years. Exactly where would they go? Jobs are here, families are here, the great weather is here. There’s a reason our population is growing – this is a fabulous place to work and live, in spite of high prices and congestion.

Ask Us: Type Of License Needed To Be A Property Manager In California?

Where readers ask, and we (the community) try to answer:

To folks reading this blog:
In California, do you need a real estate broker’s license in order to be property manager? Or just a real estate agent’s license? Or no license needed?
Thanks.
David

David,

As far as we know, and you’ll want to consult CAR.org, if you plan on having your own office and essentially starting a new business you will need a Broker’s license. If you plan on “hanging” your license at a Brokerage and working for a company that already exists and that company has a Broker’s license already, you will only need an Agent’s license. You definitely need one or the other, so why not get both!

Hope this helps….

Can I Get Some Comps To Support My Fight To Lower My Assessed Value (& Property Taxes)

The pennies keep piling up for reader requests to us for help on reducing property taxes and providing comps to support such claims, so we’ll go ahead and print a couple of the latest and the new boiler plate reply we’ll be sending along:

Hi – I was wondering you could point me in the right direction…I am considering submitting an “informal review request” to the SF Assessor-Recorder’s office to lower the assessed valuation of my condo. I need to support my application with sales data on comparables from the period around 1/1/10 to 3/31/10. [We’re good, but can’t predict the future. ;-) ] Can you tell me if there is a website or other source where I could find this data?

Thank you.

Or something like this:

Hello Alex,

Thanks for your sfnewsletter [One of these days I (Alex) will get back to writing one!]. I really enjoy reading it. I got a letter from Phil Ting to have our house re-assessed. They need comps in the neighborhood. Although your newsletter has the recently sold report, I was looking for something more extensive, say for the entire 2009 calendar year. Do you know how I can get this?

I live in Forest Hill, and I would like to find information on this area.

Thanks very much,
D

Thank you both (and the countless others that have received this same boiler plate reply) for your emails, and thank you for reading. I’ve done this before and I know how it goes. I send comps, you take to the city, they say they want different comps from different times. So do me a favor and ask them EXACTLY what types of properties they want to see and EXACT dates and I’d be happy to pull them for you.

I’ll get them back to you as soon as I can. All I ask in return is that you consider working with me when the time comes for you (or your friends) to buy or sell real estate in San Francisco…

Cool?

Ask Us: Does Blogging Work For Real Estate?

Where readers ask, and we try to answer:

Hello Alex,

I came across theFrontSteps today while researching local real estate blogs. My mother is an agent in NJ and she came to me about advice on creating a blog and testing other social media channels to help her business. I figured I’d research what others are doing and your blog is one of the best I’ve come across so far. Well done!

I’ve got a lot of experience in creating blogs and online marketing, so have a pretty good idea of the direction I’d suggest she take. Just thought I’d go straight to a source to see if anyone is having success with real estate blogs. My one question is – does it work? Are you gaining (great) leads from the search engines and your blog? I certainly understand if you’d rather not divulge.

Feel free to reach out to me with any questions you might have on blogging and online marketing. I’ve been in the industry for 12 years now.

Cheers,
-T

Dear T,

Thanks for the kind words and writing in. Glad you were able to find us and glad you like what you see. Your question couldn’t have been more timely as we were preparing a post on this very topic. The long and short of it…YES! This site is a tremendous source of quality leads, and if we chose to chase every lead down I’d certainly be one of the Top Producing agents in the city, but somehow leisurely activities like surfing, skiing, and golf seem to continually get in the way. ;-)

Some examples of what kind of business this blog brings in: We received a lead to price (and eventually sell) a $2.4M condo at the St. Regis, which led us to meet a buyer at the open house, who then went on to purchase a $1.6M home on a hill; A lead came in because of the Tour de San Francisco I used to write and just yesterday we closed on a $3+M pad in Palo Alto, and those clients are dear friends now; To put icing on the cake, a deal was closed last year based off a lead that came as a result of this blog and a few Tweets on Twitter.

So the answer is a resounding YES! It works, and it works well. Almost too well. I feel badly for the readers and potential clients that contact us and we let slip through the cracks. Sorry all…it’s not personal.

Oh, and by the way. I came across the below blog while researching. Looks like they have good content and a decent readership. They just closed shop. Might be worth looking into acquiring.??

San Francisco Schtuff

Best,
T

Thanks for the tip…we like, but can’t afford, their Schtuff. ;-)

Ask Us: St. Regis Wealth, The Question From Left Field…or Maybe Afghanistan

In this little “Ask Us” segment we typically field the standard, “I’m buying a house, I need your help” type question, but this one that came across our email recently is quite extraordinary, if not bordering on spam, but somehow, we think it’s legit:

StRegis

Good afternoon,

I know you are probably busy but it would be nice to receive a message back in regards to my question.
I am an Infantry soldier from the San Francisco Bay Area currently deployed. I am looking at going back to active duty and working on college when I return from this combat deployment.
I have always been a hard worker and believe strongly in being paid for my hard work. My question for you is what types of people purchase these units and other units like them. More or less how do they generally go about assuming such wealth where they can afford prices like these. I am not appalled or discouraged just curious as to where they are coming from so that one day I might be able to provide for my family in such a similar manner.
Thank you in advance for your time and assistance.

When you say “deployed”…care to elaborate a little on where you might be? Wherever you are, Hi to your fellow soldiers from all of us here. Happy Holidays to you as well.
(This all assumes your email is legitimate, and we didn’t just get spammed. [See Update Below.]

We aren’t that busy, and we’ll gladly send a message back, but we thought we could do better and post it, so maybe, just maybe, some other readers can shed some light.

Some people you might have heard of that take residence at the St. Regis: Former Vice President of the United States, Al Gore; and Former Mayor of San Francisco, Willie Brown. Our post on the buyer of one of the penthouses at Millennium Tower might help shed some light as well. Of course, these buyers are a bit extraordinary, and there are also savvy business men and women, day traders, bankers, venture capitalists, real estate developers, and the like that buy these homes as well, so don’t go thinking you need to get into politics to buy a home at the St. Regis or any other high rise luxury condominium. ;-)

[Update: The reader is legit, and had this to say in response, “Yes, I am forward deployed to a combat zone, due to the nature of the situation I can not give too much information tho. When the weather clears, hopefully soon, and we have increased bandwidth I look forward to finishing the story of Tom Perkins.”
Okay then, when the weather clears and you need some comic relief, have a look at this too. Here’s another one. Make sure to get to 2:00, so as not to miss Osama bin Manicure, and 2:39 for extra laughs. Good luck, and Happy Holidays!]

Ask Us: Income Property, Foreclosures, Short Sales, Rent Control & Impatient Realtors All In One!

Where readers ask, and we (the community) try to answer:

Dear tFS,

I have been following your newsletters for awhile, now that my husband and I are considering investing in an income property, we are coming to you for advice. A friend of ours has referred an real estate agent and we have worked with him for about a month. The area which we have visited are Ingleside Heights, Oceanview, Excelsior, Geneva or Alemany ( got a bit confuse after awhile) along 3rd St., and original Daly City.

Our original intention was to look at foreclosures and short sales since we thought we might find something closer to our budget, but our agent explained that the process would take a very long time and the price difference is minimal so it is not really worth the hassle.

We are in our 40’s and will sell this income property when we reach retirement age so this will more or less be our retirement nest. We have a pre-approval letter already but we are not sure which locations would make the best option with the following considerations:

Rent control & Tenants rights
Monthly Rental Income
Future prospective of the property

Your insight would be most appreciated.

Yours truly,
L

We have to say that ALL of your questions generally depend on each individual property in each different location. There is really no “blanket” answer we can provide, especially in regards to rent control, monthly rent, and future prospects of the property. We can; however, comment that it is true a short sale takes much longer to sell, if at all, but the price difference can be substantial, so you might want to corner your agent on that topic and find out where the hassle really lies…with them not getting paid soon enough? ;-) They are a hassle though…no doubt, but it is to your advantage to have an agent with sticktoitiveness (you need a lot of it as well).

Best of luck to you. Thanks for reading, and thanks for writing in!

Ask Us: Do Lenders REALLY Need All That PRIVATE Information?

Where readers ask, and we (the community) try to answer (in the comments below, so don’t be shy):

“For the past 12 months, all our attempts to refi to lower the rate to 5.25 or better have fallen short. Many times, it starts great – then stops short when reaching the line that says I don’t work regardless of any other financial info. (2 borrowers = 2 jobs for more than 24 months each)

We have found a broker that is ok to attempt a refi – but he’s asking for “Copies of 2007 and 2008 W2’s and 1040 Federal Tax Returns (all pages and schedules)”

Although I understand where this request comes from (and I agree that lax practices created the current mess) I’m extremely concerned about giving our most intimate and private information away.

From my point of view, there is absolutely no justification for disclosing to a loan officer:
– all details of all the medical bills.
– all details of fertility treatment, adoption, abortion and other family expenses and whatever items that can be listed.
– all details about your nanny and other children care expenses.
– all details about your religious life – who you gave to, and how much
– all details about your political life – who you supported and how much
– all details about your off shore bank accounts, details about your children college accounts, and other private stashes of money,
– a complete copy of your foreign tax returns
-etc.

The broker was adamant that banks are not accepting 1040 with ANY data missing, pages missing, lines blacked out….

If I understood correctly, an application including the authorization for the release of the Feds records (4506-T) – but missing OUR voluntary copy of the tax return won’t be accepted either (something we would have – somehow – agreed to).
The broker wouldn’t even understand why I agree to disclose this info to our accountant and to the Feds – and refuse to give it to several banks/lenders.

And so we get to my questions….

1. What is the legal ground for such a request – and is there a way to work with that type of requirement?
2. What are the legal protections against misuse of information – like personal retaliation (someone [posting] your info online or somewhere else?) – or even plain discrimination (loan officer doesn’t appreciate your political support on prop 8, or refuses to loan to an HIV positive couple?)
3. How much is my information worth? Where is the threshold when the savings is more important than my privacy?

Any information you or your readers can provide would be much appreciated.

Sincerely,

[A Regular Reader]”

Ask Us: 815 Alvarado Just Doesn’t Jibe

Have a look at the front of 815 Alvarado (4 bed, 3.5 bath, 3 car parking, “Single Family Residence” asking $2,965,000) :

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Now have a look at our reader’s question:

So whats the story on 815 Alvarado, SF…..listed as a House…but really has a Legal Inlaw, and only 2 bedrooms upstairs. One can be divided….but you have no hallway in between. Property tax records still have it based on original purchase price with no improvements in the structure base. All work performed under permit???

So what do the tax records say? Well, for starters, 688 square feet! (To further confuse you, we pulled tax records via MLS, which shows the new property photos that clearly don’t jive with the data.)

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Sounds a little bit more like this doesn’t it? Record of sale in 1997 for $325,000 from $279,000 asking:

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It really doesn’t jibe, and this is all too common and one big reason tax records in San Francisco should be taken with a grain of salt. But to answer your main question, “all work performed under permit”, we’d have to assume yes. If not, that is a monumental oversight on the part of the city…which of course wouldn’t surprise us. As to the the story on 815 Alvarado, we’ll have to defer to some of our other readers to help with that question, as we do not have the answer. There is also a good thread on this house on SocketSite. You might want to lob your question in there too.

[Update: Sophie digs up the permit dirt and adds her “$.02 to the buyers… have EVERYTHING checked and rechecked … so you don’t end up paying top dollars for the house AND top dollars for cleaning/clearing the messed up permits.”]

Thanks for reading theFrontSteps!

815 Alvarado [property website]
Tax Records 815 Alvarado

Factoring Weather When Buying A Home In San Francisco Is Anything But Simple

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We get these kind of inquiries all the time, and it’s certainly something up for debate, as we all have our own comfort levels as to what is considered warm or “nice”. Heck, Dave Navarro of Jane’s Addiction lives in Sunny warm L.A., but by following his Twitter feed, you’d think he’s better suited for living in foggy Outer Sunset of San Francisco. So a reader brings up the question and maybe this time we’ll get some definitive answers as to just how different one district’s weather is from the other. (We’re going to ask for a little link help from our friends at Curbed Sf and SFist to help spread the word.):

I’m looking to buy and comparing districts, everyone says : Mission and Noe are much warmer, get more sun,…

Is there a good resource that shows sun-hours and temperature (average/per month) like this below would, but by district:
Climate in San Francisco County

It would be quite interesting to many buyers I think!

Thanks

J

Our answer, take a look at the San Francisco Districts Map (as it pertains to real estate). Take a ruler, draw a straight line from District 7a (Marina) to district 3J (Oceanview). Anything to the left (west), cold(er) and windy most of the year. Anything to the right (east), warm(er) and windy most of the year.
Simple as that?

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We’re thinking there should be a lot more little red lines running all over this map, but the simpleton in us said to do it this way…

[Update: So I had a little extra time on my hands while child #2 napped. Basic, rudimentary mockup here:
Yellow circles are generally where it is warmer. Arrows indicate wind. The larger the arrow, the stronger the wind. The white line down the middle is generally the fog line.]
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Ask Us: What’s The Real Estate Forecast For Bernal Heights

Where readers ask, and we (the community) try to answer.

We pulled this from Lily on Why the Fuss About Noe Valley. The question is pretty simple, the answer, however, is very complex:

What’s the real estate forecast for Bernal [Heights]?

The Fluj has already taken the bait and provided some answers on the thread, anybody else care to chime in here on Bernal Heights?

Our answer…it’s headed down along with the rest of the city and will bounce around the bottom for quite some time. We’d say the free-fall appears to be over, but the feeling of panic is definitely out there amongst buyers that the bottom is here, and there are buyers making offers across the entire city feeling the deals won’t get much better. Our advice to our buying clients, buy if you feel comfortable, then tune out for the next 5 years and enjoy your home. This applies to every nano-market the city has to offer.